A Prototype For Global Marketing

PM Beef Group is a beef buyer's dream. Most global beef customers would appreciate buying from a company that provides different product specifications depending on their markets. And, if they're foreign buyers, they want a company that gets the product to its destination.They get all that and more from PM Beef Group. Under the umbrella of its parent, PM Holdings LLC, PM Beef Group generates and markets

Doug Perkins | Mar 01, 2000

PM Beef Group is a beef buyer's dream. Most global beef customers would appreciate buying from a company that provides different product specifications depending on their markets. And, if they're foreign buyers, they want a company that gets the product to its destination.

They get all that and more from PM Beef Group. Under the umbrella of its parent, PM Holdings LLC, PM Beef Group generates and markets a wide variety of products for a diverse range of domestic and international markets. It's the kind of company that knows how to work in the new beef economy by servicing its global customers in specific ways better than ever before. PM Holdings LLC includes:

* PM Feeders in Omaha, NE, which works backward into the beef production system with its cow/calf producer partners and certified feedyards to produce consistent beef products. Its retail customers dictate the specifications for these products.

* PM Windom in Minnesota, a custom-slaughtering plant.

* PM Hartley in Iowa, a custom fabrication plant.

* PM Richmond, a central cutting facility located near PM Holdings' corporate headquarters in Richmond, VA. The facility trims subprimals into retail cuts, eliminating the slightest variations caused by different meat cutters even within the same retail chain. All beef in PM's retail branded product line also is aged for 14 days to ensure optimum tenderness.

* PM Omaha, a specialty meat product company for domestic and international customers.

* And, PM Global Foods, which sells cattle fed for the company as well as commodity beef and other protein sources to markets around the world.

The company's unique production coordination and customer service philosophy allow it to generate a retail branded product for two major retailers - Ukrop's and Heinen's. It also packages the Amana beef product for the HyVee retail chain. It is the largest kosher processor in the nation. And, it has a large commitment to export markets.

Specifically Addressing Customer Needs With one foot in the domestic market and the other offshore, PM prides itself on marketing specifically to customers' needs. The target of its feeding program is a Yield Grade 1 or 2 low-Choice to Select product, but the company is considering targeting an upper two-thirds Choice product for its Asian customers. And, its feeding program allows it the flexibility to do so.

"One of the changes we're looking at is creating a new grid, in addition to our existing grid, to reach different specifications for different customers and to allow us to get more cattle in the upper two-thirds of Choice," says Rick Carlson. Carlson is PM's vice president of beef operations, Kansas City, MO.

"We would create new grids in order to create other new product lines. That would allow us, for instance, to have an export grid that would help producers target the highest quality export markets," he explains.

At present, PM Feeders primarily focuses on the company's branded program for Ukrop's and Heinen's. But the company's feeding plan has many features that could allow the company to appeal to foreign buyers. The company is exploring the possibility.

"We have aligned our product so when we work with feedlots we can build a product for most markets," says Leann Saunders, PM's marketing director.

That flexibility gives PM Holdings a quick advantage into feeding for international markets should conditions warrant. It has developed live cattle standards for its domestic markets that are stringent enough to satisfy the crustiest European diplomat while pleasing the most demanding Asian hotel or restaurant.

The process starts with what Saunders calls the company's "functional coordination." In a trademark twist on the traditional cattle marketing industry, PM allows cow/calf producers and feedyard operators to remain independent businessmen who produce beef in concert with the company's marketing objectives through a specific set of management practices.

"Our customer base is diverse," says Ken Fox, PM's director of cattle feeding. "Our cow/calf producers are located as far east as Virginia, as far south as Georgia and as far west as California."

PM specifies breed types and the cow/calf producer's health program. Among PM's requirements are providing documentation of type, location and method of injection and adherence to withdrawal times. All producer clients have to follow a Beef Quality Assurance program. And each has to sign an affidavit stating that the producer has never fed meat or bone meal to cattle.

The latter requirement, although fairly cut and dry in the U.S., is a huge selling point in foreign countries that have concerns about BSE. Organic matter from bovines fed to cattle has been suspected as a possible reason bovines become infected with BSE.

Specification Feeding Fox works with nine company-certified feedyards located in Nebraska, South Dakota, Minnesota and Iowa. The cow/calf producers retain ownership through the feedyard, with their cattle undergoing a feeding regimen specified by PM Holdings.

To become certified, Fox says, the feedlots, for the last 100 days on feed, must feed PM's cattle 60 megacalories of net energy gain (NEg) per head on a corn-derived ration, as well as 1,000 IUs/head/day of Vitamin E for 100 days.

Fox calls the NEg requirement "really bare bones," but the Vitamin E stipulation again has huge international implications. Vitamin E extends shelf life, important when shipping fresh beef overseas over a period of weeks. The 1,000 IUs of Vitamin E has been recommended by international research, Fox says.

Although the PM feeding division is continuing to adhere to the 1,000 IUs, Fox says the company may reduce that level based upon research that shows optimum levels for domestic marketing.

Other positives that allow PM to target the domestic market while still poising itself for export include its carcass specifications. Its current retail brand grid system pays premiums for cattle that produce:

* 600- to 950-lb. carcasses, * 1/10 to 4/10 inch back fat,

* 11- to 17-inch ribeyes and

* low Choice and high Select carcasses.

Anything outside these ranges are eliminated, as are hardbones. The company does not want to slaughter any calf over two years of age.

Its highest premiums are for:

* 750- to 875-lb. carcasses,

* 2/10 to 3/10 inch back fat and

* 14 to 16-inch ribeyes.

Some of these specifications could change for different foreign markets. But a track record of adhering to tight specifications is also of interest to many foreign buyers. It allows them to differentiate their marketing line from generic beef produced in competing countries like Australia, Argentina and some European countries.

Feedback Helps Build Performance PM's continuous feedback to its producer partners helps make those specifications easier to reach with each calf crop. PM's partners receive data on how their cattle perform in the feedlot, yield and quality grade, ribeye size, percent kidney, pelvic and heart (KPH) fat and other important information. That allows a tight communication circle within the company that permits the producers to come closer to their product specifications, regardless of the target market.

PM's branded beef program also enjoys USDA process verification certification, which could be an added marketing tool. PM became the first "ranch-to-retail" beef program to receive that accreditation. To PM's customers, USDA certification means the company's statements are verified by a third-party organization that is highly respected around the world.

"For us, the certification tells retailers that USDA is monitoring our process and they can feel comfortable that there is credibility behind it," Carlson says.

For international customers, that same certification could mean huge dividends for PM. In fact, a main reason USDA developed the program was to open up new opportunities for exports of meat. Europe has had a similar certification process for its meat industries for several years.

"It could become like a heart-healthy certification (from the American Heart Association) in terms of significance," Saunders says. "That's an important story to a potential customer."

Through astute planning and implementation of its requirements, PM has the ability to move into new markets - from export to domestic - at any time. It's a luxury that global beef buyers only dreamed about in the past. Today, it's tantalizingly close to reality.